SUPPLIER FINANCIAL ANALYSIS
COURSE OBJECTIVE
- To learn what is important to look for in financial statements
- Identifying potential financial misstatements
- Recognizing the "Red-Flags" on financial statements
- Using ratios for quick analysis
- Using a range of Excel® models to analyze a supplier with little information.
Each participant will receive an Excel® workbook of the case study templates to be worked through during the program so please bring your laptops loaded with Excel® 2010 or later.
WHO SHOULD ATTEND?
Supply Management professionals who want to learn about the relationship between finance and procurement while learning and/or revisiting the advanced concepts of the financial side of the business.
- Financial professionals
- Operational managers
- Process owners
- Project managers
- Everyone tasked with the effective and efficient evaluation of potential investments, acquisitions, outsourcing agreements, or long-term contracts
- Those responsible for the making or evaluating management of a decision-making process and want to use Excel® more effectively and an analytical tool
TRAINING METHODOLOGY
Participants will gain from a combination of instructional methods, including lectures by an experienced practitioner and consultant, exercises, group discussions covering current practices and their relationship to the implementation of concepts and techniques discussed.
WHAT YOU WILL LEARN
- A proven set of decision-making tools and financial analysis techniques
- How to effectively evaluate suppliers’ financial status
- How to apply best-practice financial practices to SMP.
- How to build a convincing case study for decision-making
COURSE OUTLINE
I. Finance and Accounting introduction
- a) Basic financial statement understanding
- i) Balance Sheet
- ii) Income Statement
- iii) Cash Flow Statement
Case study: Find the Links between the 3 financial statements
- b) Non-Cash Deductions & its Impact
- i) Depreciation vs. Amortization vs. Depletion (with Excel examples)
- c) Financial vs. Management Accounting (with Excel examples)
II. Key Ratios for Analysis
- a) What are Ratios & why are they important
- i) Liquidity; Turnover; Leverage & Profitability (Excel Ratio model)
Case study: ROE, ROA & Equity Multiplier calculations using the DuPont Model
- b) Suppliers Benchmarking model
Case study: Compare Supplier Ratios to Peer group
- c) Operating Cycle vs. Cash Cycle
Case study: Calculate the Cash & Operating cycles of a Supplier
III. Financial Analysis
- a) Altman Z-Score to measure financial Solvency – 3 approaches
Case study: Calculate the Z Score model; predict bankruptcy
- b) Beneish M-Score model & what it tells us about earnings manipulation
Case study: Apply the Beneish model to determine if earnings are real
- c) The F-Score & how is reveals potential fraud
Case study: Calculate a supplier’s F-Score to determine accuracy of financials
- d) The Sloan Index to compare cash flow to profits
Case study: Calculate this index to see how solid their cash flow is
IV. Supplier Analysis
- a) Sourcing analysis (Excel model)
- b) Sourcing alternative analysis (Excel model)
- c) The value of taking/passing on a Discount
Case study of a Supplier Discount
- d) What is the value of the Economic Order Quantity (EOQ) (Excel model)?
- e) Target Costing Model (Excel example)
- f) How do you know how much External Funding is Needed by a Supplier?
Case study: Calculate EFN to make sure they have enough
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